APPLE PAY: behind the scenes
Apple Pay is nothing more than a contactless payment method that works with Apple devices. It also works together with Apple Wallet (a digital wallet, i.e. an online version of a physical wallet) in a combination of tremendous potential:
— Nearly two thirds of #digital consumers globally make use of digital wallets for online or offline purchases (Euromonitor). Based on Juniper Research, the number of unique digital wallet users will exceed 4.4 billion globally by 2025
— Mobile payments will account together with A2A payments for around 48% of all electronic transactions by 2026, according to WorldPay
— In 2014 when Apple launched Apple Pay, the size of the global mobile payments market was just $0.5 trillion (Market Research Store). Fast forward to 2021 and the market had grown to $1.97 trillion with projections from Fortune Business Insights bringing the figure to $11.83 trillion in 2028 (annual growth of almost 30%)
To understand the market dynamics, Chinese SuperApps AliPay and WeChat, which are in certain ways an example of what Apple tries to achieve in the west, have today over 1 billion registered users each. Apple has managed within 8 years to exceed half a billion users (we need to take into account that Apple Pay has never managed to take off in China).
The reason why Apple has managed to be so successful is twofold:
— It is the first player that has managed to effectively bring together different stakeholders of the mobile payments’ ecosystem under one roof: credit card schemes, banks and merchants. Today Apple works with all 4 major card players (Visa, Mastercard, Discover, and American Express), has signed partnership deals with more than 5,000 banks globally and has onboarded thousands of retailers across 74 countries. It is indicative that in the US where it is dominant, 92% of all the mobile wallet payments done in 2020 were made via Apple Pay
— Its unique customer base has allowed Apple to build this #business on a global, large-scale base from day one by being able to address a pool of more than 1 billion iPhone active users globally or 1.8 billion active devices
A few days ago, the news that Apple processed $6 trillion annually overpassing Mastercard was all over the internet, creating impressions that are however false. Even if the figure is correct, we have to remember that Apple transactions are at the end of the day Visa, Mastercard, Discover or American Express transactions. Apple Pay is only a bridge and not a new payment scheme.
Going forward digital wallets will not only continue to disrupt the world of payments but will also upend traditional #banking by replacing bank branches with mobile phones. Apple seems to have entered early on a game with huge potential.